P&G’s Tide: Just One Canary In the Mine
Preposterous!!! You must be thinking: “he’s finally gone off his wheel,” when I say iconic brands like Tide, and suggesting that other P&G mega-brands, Chevrolet, Levi’s, Nike, Coca-Cola, Wheaties, Cheerios, Skippy, Ralph Lauren, Gap, and on and on, are going to suffer a precipitous decline in relevance, in sales, and share of market; or drop dead, at the very least.
Well, yes, that is what I’m saying, because we are well into what can be called the Consumer Century. So what? All of the mega brand managers and retailers understand the power of the consumer today. Furthermore, most of them believe that classic mega brands are each powerful and compelling enough to win the purchase.
Not a chance. Today, the consumer has the power and is operating on technological steroids bringing mega brand power to its knees. This is due to shoppers’ rapidly increasing power of choice (including price dictation in a world of too many stores and websites, and too much stuff); instantaneous access (ubiquitous distribution); and demand for ever-greater experiences.
And for those brands and retailers who do not understand how to adapt or transform their models to capture this more technologically enabled and empowered consumer, they will eventually disappear. Even for those who do get it, and change accordingly, at best they will be “grandfathered” into a niche market, diminished in value and share.
Most of the current mega brands were launched post-War II, and grew in the last “Marketing Century,” when innovation, “mega” marketing, and a very well defined and narrowly tiered distribution structure targeted equally defined and structured consumer segments. Customers’ relationships with brands and shopping behavior were easy to anticipate, understand and respond to. Also, keep in mind that the monster of more stuff, brands, and stores than the world would ever need, was just beginning to raise its ugly head—not yet at its current apocalyptic level.
So all of the harmoniously balanced characteristics between the supply and demand sides in that “Marketing Century” were a kind of mother’s milk fueling the epic expansion and scale of mega brands in a less complex and congested marketplace. Indeed, this was the era in which all the aforementioned brands, and hundreds more across all industries, defined the word “mega.” Mass markets and mass marketing were the buzzwords. And it became known as the Golden Age of advertising when the “mad men” reigned.
Those were the days when mega brands occupied the first-, second-, and/or third-ranked positions in
their respective industries, along with dominant share of market.
Demand Creation – From Simple to Steroidal to Suicidal
Then things started to go crazy. The so-called mass markets became massively congested markets. And the rather civilized competition run by the simple tactics of marketing ‘101’ turned into a more complex, kind of ‘share wars’ battlefield.
So, to use P&G as an example, there was one Tide detergent in the middle of the Marketing Century. Then more competition prompted brand extension strategies. So why not launch ‘New Tide?’ Then there was Tide with ‘bleach’. Then there was Tide “fill-in-the-blank.” And it continued through today’s count of something like 39 different Tide brand extensions.
More competitors, more copycats of P&G’s best practices, and don’t forget the proliferation of private brands, all contributed to the dizzying array of hundreds of equally compelling branded and private label detergents jockeying for position on over-stuffed supermarket shelves.
Thus, differentiation got fuzzier and fuzzier amid the chaos of unlimited choice. Accordingly, the effectiveness of the old-school P&G strategy of innovating and/or extending the brand into ever more niches, supported by millions of dollars of national advertising, began to wane.
Tide is but one example in one industry. Yet simultaneous scenarios were, and are still playing out across all consumer-facing industries. Another example; just as there used to be six major jeans brands in 1980, today there are over 800 brands and counting.
Therefore, the ‘share war’ battles intensified to a cutthroat frenzy among all brands and retailers in pursuit of competitive advantage. This was exacerbated by marketing the real or perceived differentiation among the thousands of equally compelling competitors, which were growing at breakneck speed.
Enter the Internet, Globalization and Ubiquitous Distribution
Adding fuel to the complexity and intensity of these battles today is the Internet. The good news is that it provides an incredibly powerful new channel of distribution for brands and retailers. Perversely, however, it also brings with it more online stores and stuff—including what seems like a new brand at every key-tap. Worse, the barriers to entry for new branded websites are very low, thus providing every wannabe-entrepreneur the ability to be open for business overnight.
Furthermore, along with the Internet comes contiguous technologies: smart phones, apps, and an array of gadgets and gizmos to connect with the consumer wherever, whenever, however, and how often they want to be connected, continuously providing the lowest possible price.
Globalization, aided and abetted by the Internet and technology, also connects more consumers with more brands and stores, as more and more international brands enter the US and as more and more US brands expand globally.
Are you dizzy yet with all this stuff swirling around you?
Yes, ubiquitous distribution is an apt description. Just blink and another better, newer, cheaper deal will fly in your face. A store on every corner; 10 in every block; in airports and airplanes; thousands of websites either as pure plays of “omni-channel” with physical stores; pop-ups; mobile vans; magazines as catalogues; and even brands selling in other brands’ stores (Brooks Brothers/Nordstrom, Zappos/Amazon, Sephora/JC Penney, and others).
And, of course, an awesome eye-opener, previously covered in The Robin Report, is the Tide branded dry cleaning and Mr. Clean car wash franchises expanding across the US. Talk about two mega brands seeking preemptive distribution in your neighborhood, perhaps signaling their own recognition that they must open new battlefields to protect their prime share of market.
Indeed, the need to create additional ways to grab the consumer’s buck has ratcheted up to a steroidal level.
Enter the Millennials
So far I’ve been largely describing the supply side and how brands and retailers have had to keep raising their performance levels to survive in this new hyper-competitive, over-congested world.
However, all of those characteristics have been, and still are driven by the demand side; the consumer. And it is consumers who will drive the extinction, or at least diminishment of the mega brands. And, to be more specific, it will be the Millennials who will be doing most of the driving. And they are driving the marketplace into a total reassessment of value and values.
Their post-war grandparents lived in the more simplified, uncongested marketplace and coveted the mega brands and traditional retailers. And even the Millennial’s Boomer parents in their early prime kind of carried a waning torch for those brands in the waning Marketing Century. And a snapshot of their definition of value and values generally looked like quantity over quality, addiction to discounts (even for their beloved brands, luxury included), more “stuff,” “McMansions,” and status, over experiences and lifestyle pursuits.
And even beyond the challenge of the Millennials, mega brands and retailers may end up killing themselves, committing a perverse form of suicide. As the daily tsunami of more stuff and stores continues, all of it starts to look, perform or taste alike, blurred, fuzzy and indistinct. And in this environment, price discounting becomes a weapon of choice, also exacerbated by the great ‘disruptor’ Amazon.
Discounting, the “race to the bottom,” coupon and sale addiction—all of it covered ad nauseum in this publication—are parts of the equation that will kill the mega brands. Over time, these practices erode value, either in reality by taking quality (costs) out of the brand, or simply through compromising consumers’ perception of the brand, thereby tarnishing retailers’ integrity and image. Nobody wins in “price wars,” and one cannot ost cut one’s way to top- and bottom-line growth. Ultimately one cuts to the bone, with nothing left to cut. And it ends badly. This is not sustainable for mega brands and retailers.
Tide plans to launch a new bargain version (adding to all of its previous brand extensions), citing that 41% percent of households bought “value” brands vs. premium brands, which accounted for 29% of sales. P&G stated the value segment is the only growth niche left in the detergent category.
Outlet stores seem to be the only growth segment remaining in the luxury apparel sector as well. Coach brand realizes 60% of its total revenues from its outlet stores. Nordstrom and Saks have more outlet stores than full-line stores, and are planning to open even more outlets in the future. Bloomingdale’s is accelerating its outlet store program. Ralph Lauren, while brilliantly successful in slicing and dicing the brand into various niche segments, gains a big part of their revenue through their outlet stores. Michael Kors, Vera Wang, Nicole Miller, Karl Lagerfeld and many other designer brands have launched sub-brands into mainstream and discount stores to capture more growth.
And the fastest-growing retail sector is the off-price model, primarily TJX Companies. Private brands have also moved beyond competing just on price to higher quality and more sophisticated packaging and marketing. One survey conducted by IRI (International Research Institute) found that 70% of Millennial women believe store brands have excellent quality.
These are all forms of discounting or insidiously de-valuing the brands, and it’s happening with the mainstream brands as well, across almost every industry.
Beyond this ‘lowering of all ships,’ so to speak—and possibly sinking many of them—the Millennials will add to the demise or diminishment of mega brands, because they have total quicker, smarter, and easier access to everything in the world.
Their world is informed by:
- Quality and fair pricing for real value vs. quantity, more and cheaper.
- More personalized and exclusive brands vs. conforming to what is widely marketed or ‘pushed,’ including the mega and/or big legacy brands.
- Greater experiences vs. just shopping and buying ‘stuff.’
- Artisanal goods and services, including food, and all with a story or narrative that provides authenticity and craftsmanship.
- Understatement vs. ostentation and conspicuous consumption.
- Family, friends, environment and individual lifestyle pursuits vs. ‘power’ status.
Millennials are propelling the full-on transformative effect of overcapacity, globalization, the Internet, and other consumer and market-enabling technologies that will threaten the very lives of the mega brands and traditional retailers.
This scenario suggests a future marketplace with an infinite number of finite brands and retailers micro-marketing to an infinite number of finite consumer niches that are more like small, social communities than cohorts. And brands and retailers will need permission and invitations into these communities vs. talking “to” or “at” them.
In fact, if one can imagine the extreme, each consumer may very well have his or her own special exclusive brand for every aspect of his or her life. Take it a step further, no, try a leap ahead, and imagine the ability to literally self-customize everything in your life, including food, cars, beverages, clothes and well …everything. 3D printing has come out of the ‘garage’ and is advancing more rapidly than you can say ‘beam me up.’
So, my message to mega brands and retailers: change your game from an infinitely growing mass brand, to a strategy of infinite growth into finite niches—think “universes of one.”
If you do, you just might survive. RR